Friday, October 30, 2009

Political talking points are more prevalent now than ever before. And with our heightened technological fluency and decreased attention span I imagine we will likely continue down that path. I found an article a while back that illustrates what damage can be done in an industry that I am quite familiar with; government acquisition.

The acquisition reform legislation passed by Congress is forcing major defense companies to sell subsidiaries so they don’t fall afoul of new restrictions forbidding manufacturers from owning companies that advise the government about acquisitions.

The most glaring example appears to be the pending sale by Northrop Grumman of TASC, a company with some 5,000 employees who provide the military and, especially, the intelligence community with technical advice on acquisitions and operations.

Loren Thompson, a defense analyst at the Lexington Institute, just said “yes” when I asked him if the TASC sale is largely being driven by language in the Weapons Systems Acquisition Reform Act drafted by Sens. Carl Levin and John McCain, the chairman and ranking member of the Senate Armed Services Committee. Several experienced space acquisition experts said independently that the TASC sale was being driven by the bill. The relevant text can be found in Section 207 of the bill, which requires the creation of regulations forbidding “organizational conflicts of interest.”

The long and short of it is that congress doesn't want large defense contractors advising the government on requirements while also profiting from the sale of weapons systems to satisfy those requirements. Sounds great right? Especially at a time when our national debt is higher than ever and we are spending such a large portion of our budget on defense. Not only does it sound great but it sounds a hell of a lot better when structured as a political talking point. When framed from a congressman, the tale is often told that the altruistic public servant is battling the large evil defense contractor in an effort to salvage taxpayer dollars that are greedily being hoarded. This is where those talking points can lead to legislation that gets us into trouble.

“You could get an ethically pristine arrangement that is bound to end in disaster,” with broad and ethically driven acquisition reform, Thompson said.

Thompson added that there are so few companies that know much about the technologies and operations of the NRO that restrictions could end up depriving the country of even the semblance of competition. “The problem with any one-size-fits-all approach to acquisition reform is that it leaves so little leeway for individual cases. In the case of the NRO there are only a handful of companies who understand reconnaissance satellites well, so if you start arbitrarily excluding players from the process due to conflicts that could have the unexpected result of creating monopolies,” he said.

Since Boeing’s disastrous management of the Future Imagery Architecture program, the NRO’s business has reverted to the companies that traditionally dominated the contracts issued by the Chantilly, Va. agency, leaving the industrial base there even smaller than it had been.

In addition to the possible creation of monopolies of crucial technologies, the new law may also dry up something that mey be even more precious, the experts say. That is the expertise possessed by companies such as TASC in helping ensure the government buys what it needs, builds it well and gets what it pays for. The government has largely lost the rare expertise needed to assess and analyze the acquisition of highly complex satellite systems, industry and government experts say.

The situation above is the problem with political talking points. "We need Acquisition reform!" However the problem is never as easy as the politicians package it to be. Then a "solution" creates so many second and third order consequences that a year down the road the government will legislate the other direction making efficient and timely acquisition impossible for the front line workers. Check out the Federal Acquisition Regulation (FAR) if you need proof. I am all for creating a set of rules and boundaries that encourage integrity within business, but we cannot just use a political talking point as the basis for the entire problem. If we do then we will continue to get "solutions" that open the door for new and unforeseen problems as a result of the legislation.

The major weapons systems that the big players in the defense industry are designing are incredibly complex. The companies have incredible amounts of expertise and float an immense amount of capital investment and infrastructure in order to support what our country needs for defense. Those demands and barriers to entry have already limited the amount of competition available to design a new aircraft for instance. If Thompson's prediction of even more limited competition comes true you can bet that costs to procure what the war fighter demands will increase dramatically. Which obviously is the exact opposite intention of the talking point. I know I fell into the trap of listening to digestible sound bites especially around election time, but the problems that are being legislated are often much deeper than the talking point used to deliver them.

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